1.

Solution,
Mercedes A200:
Recommended retail price (µ) = $ 44,800
Standard deviation (SD) = $ 1500
At $ 45,000 Mercedes A200 is priced out of BMW’s 120i
% of dealer prices for Mercedes A200 is more than $45,000 and hence priced out of BMW’s 120i
=?
We know,
Z= x-µ/SD
=45,000-44800/1500
=0.13
Z=.13 produces the probability area of 0.0517
Solving for the tail of this distribution, we get,
Required probability = 0.5-0.0517 = 0.4483 or 44.83%

BMW 120i:
Recommended retail price (µ) = $43,300
Standard deviation (SD) = $1200
% of BMW dealers that are 120i at more than the recommended retail price for A200 =?
We know,
Z= x-µ/SD
=44,800-43,300/1200
=1.25
Z=1.25 produces the probability area of 0.3944
Required probability = 0.5-0.3944 = 0.1056 or 10.56%
And,
% of Mercedes dealers that are pricing the A200 at less than the recommended retail price of
120i =?
Z= x-µ/SD
=43,300-44,800/1500
=-1
Z=-1 produces the probability of 0.3413
Required probability = 0.5-0.3413 = 0.1587 or 15.87%
And,
% of Mercedes dealers that price A200 less than $45,000 sold by 120i =?
Z= x-µ/SD
=45,000-44,800/1500
=0.13
Z=0.13 produces probability of 0.0157
Required probability = 0.5+0.0157 = 0.5517 or 55.17%